Kofax Aquires Digital Signature Specialist

Kofax, in an interesting move to continue to beef up its "First Mile" and smart process application (SPA) technology portfolio, acquired digital signature specialist Softpro. Headquartered in Boeblingen, in southwestern Germany, Softpro had revenue of $13.3M in 2013, and Kofax is paying $34.7M in cash, so that a valuation of over 2.5x revenue and more than 34x profit, as Softpro reported an EBITDA of $1M for 2013.

From a technology standpoint,  the acquisition a great fit. As Kofax transitions from paper toward capturing more types/channels of electronic information, digital signature technology is a natural way to extend its portfolio. Softpro actually has two types of digital signature technology - both of which dovetail nicely in to the Kofax technology stack. The majority of Softpro's revenue comes from enterprise e-signature technology packaged under the SignDoc brand. Softpro also has strong signature fraud detection technology, branded FraudOne, which is utilized by many large banks.

SoftPro fits nicely into Kofax's emerging smart process application (SPA) play.  For example, Grant Johnson, Kofax's CMO explained to DIR, how it's a natural fit with Kofax's recently announced Mortgage Agility solution. "E-signatures really helped facilitate digital business and transactions," said Johnson.

"It's a great fit for any SPA where there is customer onboarding and it's essential for a signature to be part of the documentation," added Dave Caldera a senior VP with Kofax.

While FraudOne has its place within an SPA hierarchy, it's also a nice traditional capture add-on. In addition to being used for checks, the technology can also be utilized for applications like verifying signatures on contracts. (Coincidentally, Parascript, which recently announced a FormXtra for Kofax Capture module, has touted success in similar types of applications.)

Bottom line is that Kofax paid a bit of a premium to increase its footprint of multi-channel capture/SPA technologies. Kofax CEO Reynolds Bish has said that he will not buy capture market share- and Kofax certainly is not doing that. Instead, as with its other recent acquisitions, with Softpro, Kofax is buying technologies that complement its strong traditional document capture stack and help it evolve as the market continues to increasingly embrace digital transactions over paper ones. I think the M&A landscape has shown that the more digital-transaction-oriented a vendor is, the higher valuation it will achieve.

Ensuring Security in Document Capture Applications

Not something a lot of people consider.

Check out this excellent contributed article by Parascript's Don Dew on the some of the ways organizations can ensure that their data entry operations are as secure as their back-end data systems.

New Customer Account Applications: Ensuring privacy and security in capturing sensitive information

Paperwork is often part of the first interaction point with a new customer – whether it’s new account applications or enrollment forms for employment, a credit card, or even Medicare. Because of this, information needs to be captured and entered quickly and seamlessly to provide responsive service at an important initial relationship-building stage. And, because these forms contain critical customer information – such as date of birth, social security number, and even payment data – they also need to be processed safely.

Information on applications and forms can generally be classified into two types of data: personal identifiable information (PII), and non-identifiable information (NII).  

Security, policy, and technical requirements set PII apart from NII. PII includes information such as name, address, social security number, telephone number, diagnosis, credit card accounts and email address.  The loss of PII can result in identity theft or fraudulent use of information. Meanwhile, NII includes anonymous information such as gender or age, does not identify a specific person, and, therefore, can be easier to process. 

A number of regulations make keeping personal information secure a requirement for businesses and organizations:  

•  The Freedom of Information and Privacy Act requires the disclosure of federal documents and makes it necessary for government agencies to completely remove or redact confidential information from released files.
• In the health care industry, companies and their contract providers must also comply with HIPAA in order to protect the privacy of individually identifiable health information. 
•  Financial institutions have to comply with The Gramm-Leach-Bliley (GLB) Act, which requires companies to ensure the security and confidentiality of information such as names, addresses, phone numbers, bank and credit card account numbers, income and credit histories, and Social Security numbers.
• · Many businesses also must follow PCI Standards, which provide a framework for developing a robust payment card data security process, including prevention, detection and appropriate reaction to security incidents.

With the potential for fines, penalties, lawsuits and/or embarrassment for leaking vital information, companies and government organizations are compelled to stay on top of requirements to protect sensitive information. Once this information has entered a business system, privacy is most easily managed through software encryption and permission management. However, getting information off of physical documents and into that system offers multiple opportunities for breaches, including: 1) access to information as it is being keyed in by data humans, sometimes located overseas, and/or in high turnover jobs 2) access to information located in imaged archives, and 3) access to paper originals.

Assuming that access to the original paper has been dealt with via careful retention and destruction policies, the other two scenarios can be successfully mitigated with security features built in to document capture software, acting as a first point of defense. Examples include:

Restricting access to information by only providing ‘snippets’ to validators/keyers – Document capture and recognition software solutions can enforce security at the field level, such as providing only a snippet of each form to a single operator. First name fields, for instance, can be given to one validator/keyer, social security numbers to another and diagnostics to still another, so that each piece of information on its own is benign.

Decentralizing access to information by distributing the validation/keying function - To go one step further, the information can be sent to multiple sites within the same company, completely removing and practically eliminating any chance of a security breach or misuse.

These processes ensure that any back-office human validation of forms restricts personally identifiable information by limiting the context in which it would be useful.

Preventing future information leaks through redaction – In cases where document images must be retained for archival, redaction removes sensitive information by digitally obscuring it to make documents secure for distribution. Redaction can often be efficiently achieved during the document capture process, just as sensitive information is entering an organization. Incoming documents are scanned and keyed, then sensitive fields, such as account, drivers’ license and social security numbers are automatically located and redacted by capture software, and sent to archives through a secure digital workflow.  This helps to ensure confidentiality and protect key information.  Redacted information in the archive can't be accidentally or maliciously accessed years later.

Customer onboarding is a document heavy, critical moment in the account lifecycle.  Companies need to be both responsive and protective of information that customers entrust them with on new account applications. In addition to being the law, safeguarding customer information also makes good business sense. And, with greater access to information, in a secure environment, companies can provide better service and help boost the bottom line. 

For more information, check out these videos on advanced data validation and security and locating content to protect sensitive data.

Don Dew is Director of Marketing for Parascript, a leading recognition solutions provider, online at www.parascript.com

 

Is ICR Technology Underutilized?

Don Dew of advanced document recognition ISV Parascript recently authored an article on the benefits of intelligent character recognition (IDR) technology that he has asked us to share with you. It discusses how ICR technology is underutilized on documents that include handprint and even cursive writing.

Here's an excerpt from Dew's article, "From name, address, social security number, phone number, or any other unconstrained or cursive information entered on a form, advanced ICR solutions can capture this data with a high degree of accuracy and make it available for use within the organization. Based on research performed by AIIM and Parascript last year, only 6% of organizations are automating this level of recognition. At the same time, survey participants estimated that they would achieve a considerable level of productivity savings if they were able to automate the recognition of hand-written text."

Here's the link to Dew's complete article on our DIR Web site.

Just for some background, Parascript develops advanced recognition technology that does both OCR and ICR. Historically, it has been best known for its cursive recognition, which is utilized by the USPS in their envelope and parcel sorting operations. Parascript also offers a document recognition-centric toolkit that includes both OCR and ICR. Parascript recently released a new version of this SDK, as well as a new version of its FormXtra Capture application, which it is moving through a recently revamped reseller program.

OCR/ICR Survey Highlights Infographic

We originally highlighted the results of this AIIM survey, (sponsored by Parascript) when it first came out last summer. (Download the entire report here).

Some interesting outtakes, some of which have been highlighted below in an outstanding infographic:

• 55% of respondents who were scanning documents were key entering data
• Only 32% were using OCR with ICR and cursive recognition utilization significantly lower

 Check out the rest of this info:

Data Extraction from Forms infographic

Thoughts on Parascript/AIIM Forms Processing Study & White Paper

Lot of interesting information in a recent study conducted by AIIM and sponsored by Parascript.

Parascript develops a slew of recognition technology including handprint and cursive recognition. Not surprisingly, a follow-up article written by Parascript's Don Dew highlights some of the shortcomings in adoption of handprint/cursive recognition. According to Dew, "In most organizations, hand-written fields are prevalent on a significant number of forms. 42% of respondents indicated they have hand-written data fields on half or more of their forms. In addition to being prevalent, these hand-written forms are also important to the efficiency of the business process. 40% of respondents say they are quite important; 20% say they play a key role."

 "However, many organizations are not taking advantage of this information. 88% of respondents say they scan forms, but only 32% say they perform text recognition to automatically make that data readily available for use in their organizations. The majority of respondents (55%) report they scan images and manually re-key the data as part of their workflow."

 Of course, this is where Parascript's technology could come in, or, the crowdsourcing data-entry solutions from companies like virtualsolutions and Captricity, which were featured in our last premium issue. Some combination of the two may actually form the most efficient solution.

Another interesting point made in the study is that users cited a multitude of forms as the number one reason that they are not using forms processing technology - in other words, they feel the templates are too hard to set up. This should be interesting news to companies like ITyX, a German artificial intelligence vendor that DIR was recently introduced to.

Anyhow, there is a lot of interesting stuff in this white paper about forms processing adoption, what end users are implementing it for, and why they are not in certain areas.  The bottom line to me seems to be that parochial/departmental management of many forms capture operations prevents users from looking at the top tier capture automation solutions out there. They just don't have the bandwidth to consider the cutting edge technology that is most often included in enterprise capture applications. SaaS/Cloud services may prove to be the way around this.

Datacap Parascript form partnership

Automated data capture specialist Datacap, out of Tarrytown, NY, has officially announced a partnership with recognition specialist Parascript. Parascript, which was originally founded in Russia as part of the Glasnost initiative, is now based in Boulder, CO. It's claim to fame and biggest source of revenue is a contract with the USPS for reading addresses on envelopes. Parascript is noted for its ability to recognize cursive writing and has done a couple of installations with Datacap already involving hand-filled order forms for the Baltimore Sun and TV Guide. Parascript appears to be moving forward after a proposed merger with pubically traded Mitek fell through. Both Mitek and Parascript have strong technology in the check recognition market.

Parascript Mitek

The proxy statement has been posted online. In 2005, the combined company had some $30.4 million in revenue ($24 million of which can be attributed to Parascript's operations) with an operating income of $5.6 million, which was negated by $11.5 million in interest expense. The deal is supposed to close sometime early next year. From the best we can tell, the deal values the combined company at somewhere north of $140 million. This is based on investor Plainfield OffShore Holdings receiving 23% of the company in exchange a $35 million investment in 21.9 million shares of Mitek common stock at a conversion price of $1.60 per shares. Of course, Plainfield also get $55 million in senior secured debt in the terms of the deal, so while that number of shares may have a $140 million valuation to Plainfeld, it probably does not truly relfect the open market valuation of the combined company, which will be known as Parascript. Does that make sense?

Ralph